[Congressional Record Volume 149, Number 67 (Wednesday, May 7, 2003)]
[Senate]
[Pages S5793-S5798]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                TAX CUTS

  Mr. HOLLINGS. Mr. President, it is fortuitous that the distinguished 
Presiding Officer is the forerunner of the position: If we are going to 
cut taxes only $350 billion, you are going to lose his vote. The debate 
has ensued from $756 billion to $350 billion to try to make for a 
compromise of $550 billion in tax cuts. But the most responsible voices 
say at this particular time: No tax cuts.

[[Page S5794]]

  The present Chairman of the Federal Reserve, Mr. Alan Greenspan, 
says: No tax cuts. I ask unanimous consent to print in the Record an 
article from the New York Times, dated May 1, 2003.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                 [From the New York Times, May 1, 2003]

  Greenspan Says Tax Cut Without Spending Reductions Could Be Damaging

                        (By David E. Rosenbaum)

       Washington, April 30.--Alan Greenspan, the chairman of the 
     Federal Reserve Board, told Congress today that the economy 
     was poised to grow without further large tax cuts, and that 
     budget deficits resulting from lower taxes without offsetting 
     reductions in spending could be damaging to the economy. 
     Opponents of the large cut favored by President Bush took Mr. 
     Greenspan's testimony as support for their position.
       Mr. Greenspan's statements to the House Financial Services 
     Committee were made as new Treasury data showed that tax 
     revenues have arrived at a much slower pace than expected 
     this spring. As a consequence of the revenue shortfall and 
     increased spending enacted this month, government and private 
     analysts said today, the budget deficit this fiscal year will 
     be at least $80 billion higher than the Congressional Budget 
     Office projected last month.
       With a large deficit, Mr. Greenspan said, ``you will be 
     significantly undercutting the benefits that would be 
     achieved from the tax cuts.''
       The combination of Mr. Greenspan's testimony and the 
     prospects of a higher deficit gave added ammunition to Mr. 
     Bush's political opponents, as the president continued today 
     to press Congress to approve a $550 billion, 10-year tax cut.
       ``These deficit numbers are just the latest reminder that 
     what many of us have expressed concern about is becoming even 
     more of a problem,'' said Senator Tom Daschle of South 
     Dakota, the Democratic leader.
       The president met today on the tax issue with Republican 
     Congressional leaders. Afterward, Senator Bill Frist of 
     Tennessee, the majority leader, said that the president and 
     all the leaders wanted as large a tax cut as possible and 
     that Congress might consider more than one tax measure this 
     year.
       Ari Fleischer, the White House spokesman, played down any 
     disagreement with Mr. Greenspan. Last week, the president 
     announced that he would renominate Mr. Greenspan to his fifth 
     term as Fed chairman, and Mr. Greenspan, 77, said he would 
     accept.
       Mr. Fleischer said today that Mr. Bush's first priority was 
     creating jobs immediately and that the government could 
     reduce the deficit ``over time.'' He agreed with Mr. 
     Greenspan that the best way to lower the deficit was to hold 
     the line on government spending.
       Mr. Greenspan said that with the end of the uncertainties 
     associated with the war in Iraq, the economy was in a 
     position for strong growth. But if that does not occur, he 
     said, the Fed was prepared to lower interest rates further.
       As is his practice, Mr. Greenspan spoke elliptically in his 
     Congressional testimony and never addressed the tax 
     legislation before Congress specifically.
       But he said that even without additional stimulus, ``the 
     economy is positioned to expand at a noticeably better pace 
     than it has during the past year.''
       He also said new academic evidence had strengthened his 
     opinion that budget deficits led directly to higher interest 
     rates.
       Mr. Greenspan's view on tax cuts is similar to one he 
     expressed in February, but the environment has changed. 
     Congress is now on the verge of drafting and voting on actual 
     tax legislation, and the Fed chairman's views on economic 
     matters carry more weight in Congress than the opinions of 
     any other economist.
       In response to a question about the need for additional 
     economic stimulus, Mr. Greenspan said that with the tax cuts 
     enacted in 2001 and sizable growth in government spending, 
     ``we already have a significant amount of stimulus in 
     place.''
       He added that he was skeptical of the ability of changes in 
     tax and spending policy to ``fine tune'' the economy in the 
     short term.
       Mr. Greenspan said he strongly supported the president's 
     tax policy, particularly the proposal to eliminate taxes on 
     most stock dividends, ``provided it is matched by cuts in 
     spending.''
       Deficits are especially important in the near future, he 
     said, because of the pressure on the economy early in the 
     next decade when the baby boom generation begins to reach 
     retirement age.
       The shortfall in tax revenues has been apparent all spring, 
     but the magnitude did not become clear, economic analysts 
     said, until they examined the Treasury's daily reports of tax 
     receipts in the two weeks since the April 15 filing deadline.
       William C. Dudley, chief economist at Goldman Sachs, said 
     he was seeing ``a pretty sizable shortfall relative to 
     expectation.''
       Goldman is forecasting a $425 billion deficit in the 
     current fiscal year, which ends Sept. 30. In February, the 
     White House projected a deficit of $304 billion. Last month, 
     the Congressional Budget Office, using a different method of 
     calculation, projected a deficit of $246 billion.
       A senior Republican staff member in Congress who has 
     analyzed the Treasury data said that revenues were running 
     about $40 billion lower than the Congressional Budget Office 
     expected. He said tax refunds were about $20 billion higher 
     than anticipated and tax payments about $20 billion lower.
       One reason for the shortfall in revenues, economists say, 
     is that the poor performance by the stock market in 2002 
     resulted in smaller tax payments of capital gains taxes and 
     fewer taxes paid by business executives who exercised stock 
     options.
       In addition to the deficit increase resulting from lower 
     revenues, the projections by the White House and the 
     Congressional Budget Office do not count the $42 billion in 
     additional spending, mostly for the war, that Congress 
     approved this month. Nor do they consider the likelihood that 
     Congress will approve tax cuts and make at least some of them 
     retroactive to Jan. 1 and the probability that the 
     administration will ask Congress for additional spending 
     authority for reconstruction costs in Iraq.

  Mr. HOLLINGS. Mr. President, the former Chairman of the Federal 
Reserve, Paul Volcker, the former Secretary of the Treasury, Bob Rubin, 
as well as the former Secretary of Commerce, Pete Peterson, call for no 
new tax cuts. They took this stand in an article in the New York Times 
on April 9, 2003. The position they take is that budget deficits 
matter. There is no question that we had a conscience with respect to 
deficits. The economists at the Federal Reserve have said that every 
$100 billion in deficits raises the interest rate a quarter of a 
percent, and our friends at the Brookings Institution say, no, every 
$100 billion in deficits raises the interest rate one-half to 1 
percentage point.
  The point is, look at what we are doing. I ask unanimous consent to 
print in the Record a chart of the budget realities.
  There being no objection, the material was ordered to be pritned in 
the Record, as follows:

                                                               HOLLINGS' BUDGET REALITIES
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              Annual
                                                            U.S. budget   Borrowed trust      Unified     Actual deficit                   increases in
                     Pres. and year                        (outlays) (in       funds       deficit with    without trust   National debt   spending for
                                                             billions)      (billions)      trust funds        funds        (billions)       interest
                                                                                            (billions)      (billions)                      (billions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Truman:
    1947................................................            34.5            -9.9            -4.0           +13.9           257.1
    1948................................................            29.8             6.7            11.8            +5.1           252.0
    1949................................................            38.8             1.2             0.6            -0.6           252.6
    1950................................................            42.6             1.2            -3.1            -4.3           256.9
    1951................................................            45.5             4.5             6.1            +1.6           255.3
    1952................................................            67.7             2.3            -1.5            -3.8           259.1
Eisenhower:
    1953................................................            76.1             0.4            -6.5            -6.9           266.0
    1954................................................            70.9             3.6            -1.2            -4.8           270.8
    1955................................................            68.4             0.6            -3.0            -3.6           274.4
    1956................................................            70.6             2.2             3.9            +1.7           272.7
    1957................................................            76.6             3.0             3.4            +0.4           272.3
    1958................................................            82.4             4.6            -2.8            -7.4           279.7
    1959................................................            92.1            -5.0           -12.8            -7.8           287.5
    1960................................................            92.2             3.3             0.3            -3.0           290.5
 
Kennedy:
    1961................................................            97.7            -1.2            -3.3            -2.1           292.6
    1962................................................           106.8             3.2            -7.1           -10.3           302.9             9.1
Johnson:
    1963................................................           111.3             2.6            -4.8            -7.4           310.3             9.9
    1964................................................           118.5            -0.1            -5.9            -5.8           316.1            10.7
    1965................................................           118.2             4.8            -1.4            -6.2           322.3            11.3

[[Page S5795]]

 
    1966................................................           134.5             2.5            -3.7            -6.2           328.5            12.0
    1967................................................           157.5             3.3            -8.6           -11.9           340.4            13.4
    1968................................................           178.1             3.1           -25.2           -28.3           368.7            14.6
Nixon:
    1969................................................           183.6             0.3             3.2            +2.9           365.8            16.6
    1970................................................           195.6            12.3            -2.8           -15.1           380.9            19.3
    1971................................................           210.2             4.3           -23.0           -27.3           408.2            21.0
    1972................................................           230.7             4.3           -23.4           -27.7           435.9            21.8
    1973................................................           245.7            15.5           -14.9           -30.4           466.3            24.2
    1974................................................           269.4            11.5            -6.1           -17.6           483.9            29.3
Ford:
    1975................................................           332.3             4.8           -53.2           -58.0           541.9            32.7
    1976................................................           371.8            13.4           -73.7           -87.1           629.0            37.1
Carter:
    1977................................................           409.2            23.7           -53.7            77.4           706.4            41.9
    1978................................................           458.7            11.0           -59.2           -70.2           776.6            48.7
    1979................................................           504.0            12.2           -40.7           -52.9           829.5            59.9
    1980................................................           590.9             5.8           -73.8           -79.6           909.1            74.8
Reagan:
    1981................................................           678.2             6.7           -79.0           -85.7           994.8            95.5
    1982................................................           745.8            14.5          -128.0          -142.5         1,137.3           117.2
    1983................................................           808.4            26.6          -207.8          -234.4         1,371.7           128.7
    1984................................................           851.9             7.6          -185.4          -193.0         1,564.7           153.9
    1985................................................           946.4            40.5          -212.3          -252.8         1,817.5           178.9
    1986................................................           990.5            81.9          -221.2          -303.1         2,120.6           190.3
    1987................................................         1,004.1            75.7          -149.8          -225.5         2,346.1           195.3
    1988................................................         1,064.5           100.0          -155.2          -255.2         2,601.3           214.1
Bush:
    1989................................................         1,143.7           114.2          -152.5          -266.7         2,868.3           240.9
    1990................................................         1,253.2           117.4          -221.2          -338.6         3,206.6           264.7
    1991................................................         1,324.4           122.5          -269.4          -391.9         3,598.5           285.5
    1992................................................         1,381.7           113.2          -290.4          -403.6         4,002.1           292.3
Clinton:
    1993................................................         1,409.5            94.2          -255.1          -349.3         4,351.4           292.5
    1994................................................         1,461.9            89.0          -203.3          -292.3         4,643.7           296.3
    1995................................................         1,515.8           113.3          -164.0          -277.3         4,921.0           332.4
    1996................................................         1,560.6           153.4          -107.5          -260.9         5,181.9           344.0
    1997................................................         1,601.3           165.8           -22.0          -187.8         5,369.7           355.8
    1998................................................         1,652.6           178.2            69.2          -109.0         5,478.7           363.8
    1999................................................         1,703.0           251.8           124.4          -127.4         5,606.1           353.5
    2000................................................         1,789.0           258.9           236.2           -22.7         5,628.8           362.0
Bush:
    2001................................................         1,863.9           268.2           127.1          -141.1         5,769.9           359.5
    2002................................................         2,011.0           270.7          -157.8          -428.5         6,198.4           332.5
    2003................................................         2,137.0           222.6           246.0           468.6         6,667.0           323.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Historical Tables, Budget of the US Government: Beginning in 1962, CBO's The Budget and Economic Outlook: Fiscal Years 2004-2013, January 2003.

  Mr. HOLLINGS. Mr. President, during that 30-year period under six 
Presidents, with the cost of World War II, the cost of Korea, the cost 
of Vietnam, the sum total of deficits over that 30-year period under 
Republican and Democratic Presidents was only $358 billion. Last year, 
without the cost of Iraq, it was $428 billion. We now are on course for 
a deficit this year of $600 billion.
  If there is any doubt about it, I ask unanimous consent to print page 
4 of the conference report budget resolution.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

       Fiscal year 2003: $512,284,000,000.
       Fiscal year 2004: $558,382,000,000.
       Fiscal year 2005: $487,527,000,000.
       Fiscal year 2006: $431,788,000,000.
       Fiscal year 2007: $400,325,000,000.
       Fiscal year 2008: $405,415,000,000.
       Fiscal year 2009: $366,084,000,000.
       Fiscal year 2010: $359,961,000,000.
       Fiscal year 2011: $380,680,000,000.
       Fiscal year 2012: $314,363,000,000.
       Fiscal year 2013: $301,506,000,000.
       (5) Debt Subject to limit.--Purusant to section 301(a)(5) 
     of the Congressional Budget Act of 1974, the appropriate 
     levels of the public debt are as follows:
       Fiscal year 2003: $6,747,000,000,000.
       Fiscal year 2004: $7,384,000,000,000.
       Fiscal year 2005: $7,978,000,000,000.
       Fiscal year 2006: $8,534,000,000,000.
       Fiscal year 2007: $9,064,000,000,000.
       Fiscal year 2008: $9,602,000,000,000.
       Fiscal year 2009: $10,102,000,000,000.
       Fiscal year 2010: $10,601,000,000,000.
       Fiscal year 2011: $11,125,000,000,000.
       Fiscal year 2012: $11,588,000,000,000.
       Fiscal year 2013: $12,040,000,000,000.
       (6) Debt held by the public.--The appropriate levels of 
     debt held by the public are as follows:
       Fiscal year 2003: $3,917,000,000,000.
       Fiscal year 2004: $4,299,000,000,000.
       Fiscal year 2005: $4,599,000,000,000.
       Fiscal year 2006: $4,829,000,000,000.
       Fiscal year 2007: $5,007,000,000,000.
       Fiscal year 2008: $5,169,000,000,000.
       Fiscal year 2009: $5,272,000,000,000.
       Fiscal year 2010: $5,349,000,000,000.
       Fiscal year 20011: $5,428,000,000,000.
       Fiscal year 2012: $5,424,000,000,000.
       Fiscal year 2013: $5,394,000,000,000.

     SEC. 102. SOCIAL SECURITY.

       (a) Social Security Revenues.--For purposes of Senate 
     enforcement under sections 302 and 311 of the Congressional 
     Budget Act of 1974, the amounts of revenues of the Federal 
     Old-Age and Survivors Insurance Trust Fund and the Federal 
     Disability Insurance Trust Fund are as follows:
       Fiscal year 2003: $531,607,000,000.
       Fiscal year 2004: $557,821,000,000.
       Fiscal year 2005: $587,775,000,000.
       Fiscal year 2006: $619,062,000,000.
       Fiscal year 2007: $651,148,000,000.
       Fiscal year 2008: $684,429,000,000.
       Fiscal year 2009: $719,132,000,000.
       Fiscal year 2010: $755,754,000,000.
       Fiscal year 2011: $792,152,000,000.
       Fiscal year 2012: $829,568,000,000.
       Fiscal year 2013: $869,690,000,000.

  Mr. HOLLINGS. Mr. President, you can see that the debt rises during 
the 10-year period from 2003 to 2013. Mr. President I want you to 
particularly listen to this--the debt rises from $6 trillion to $12 
trillion. I know the distinguished Presiding Officer remembers well how 
we had the balanced budget amendment running around here for 15 years.
  Remember back in 1994, the Republicans stood on the Capitol steps and 
said: Government is going to be different; we have a contract; we are 
not going to run any deficits; we are going to have a balanced budget. 
This particular budget passed the U.S. House of Representatives without 
a single Democratic vote, all Republicans.
  In the Senate, there was only one Democratic vote, the Senator from 
Georgia. Otherwise, Vice President Cheney had to come in and adopt this 
course of $6 trillion to $12 trillion. That is $600 billion a year in 
deficits each year for 10 years.
  The Chair can see I am trying to gain the attention, for Heaven's 
sake, of this body to where we can get down to reality so that we do 
not just willy-nilly go on and not even pay for the war.
  I put up an amendment to pay for the war. I could get no support for 
that. We tell GIs to go into Iraq and we hope they do not get killed, 
and the reason is we want them to hurry back so we can give them the 
bill. This generation, this Congress, this Government, aren't going to 
pay for the war.
  Now what happens? Treasury Secretary Snow says: Wait a minute now, 
you have to stimulate, you have to stimulate. Of course, we had that 
back when President Reagan started that nonsense of tax cuts. That is 
what President George Herbert Walker Bush called voodoo, and I will 
never forget

[[Page S5796]]

the chairman of the Finance Committee, Senator Dole. He was against all 
of this growth and voodoo. He said: There is good news and bad news.
  I said: Senator, what is the good news?
  He said: The good news is a busload of supply siders have just driven 
over the cliff.
  I said: Well, what is the bad news?
  He said: There was one empty chair.
  He was talking about Jack Kemp. We were against supply side and 
voodoo. But two years ago, we had voodoo 2, with President George 
Walker Bush's tax cut, which the distinguished Presiding Officer helped 
pass. Now let us see what President Bush's newest tax cuts, voodoo 3, 
will do.
  Secretary Snow said a dividend cut would boost stocks by 10 percent. 
But, look, stocks are up 14 percent since March 11. Do you believe you 
are getting rich? Do you see all the jobs busting out all over?
  On the contrary, you see Robert Samuelson talking about ``Stubborn 
Stagnation.'' I ask unanimous consent that article from this morning's 
Washington Post be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                          Stubborn Stagnation

                        (By Robert J. Samuelson)

       The economic news since the war in Iraq suggests that we 
     remain in the grips of what I've called ``the new 
     stagnation.'' It's a baffling twilight zone. We're not in an 
     economic free-fall, indeed, most Americans enjoy almost 
     unprecedented prosperity. But there's also rising insecurity 
     (over jobs, stock prices) and a persisting squeeze on both 
     government social spending and corporate profits. People 
     yearn for clarity and confidence, while the new stagnation 
     provides mainly uncertainty and contradictions.
       Consider some contrasts. Since late 2000, annual U.S. 
     economic growth has averaged about 1.5 percent (1996-2000 
     average: 4 percent). This barely exceeds the rate of 
     population growth. By one government survey, 2.1 million jobs 
     have vanished. The stock market has lost about 40 percent of 
     its value (roughly $7 trillion) since its peak in early 2000, 
     says Wilshire Associates. But most people are doing all 
     right. There are still 130 million non-farm jobs. And the 
     median price of existing homes--most Americans' biggest 
     financial asset--rose 7.1 percent last year.
       Japan pioneered the new stagnation. In the 1990s, its 
     economy foundered; unemployment rose gradually. But most 
     people lived well. Prosperity, if not growth, was widespread. 
     There was no alarm. The Japanese were cocky. Hadn't they 
     overtaken the United States economically? Everyone 
     acknowledged ``bubbles'' in stocks and real estate. But once 
     the aftershocks passed, the economy would revive smartly. It 
     never did. Since 1992 Japan's growth has averaged 1 percent 
     (1980s average; 3.8 percent).
       We're not Japan--but we could slip into the same trap. 
     After the euphoria of the '90s, Americans believe that their 
     economy can't be held down for long. The standard diagnosis 
     now is that it's suffered from temporary setbacks: the stock 
     bubble, Sept. 11, corporate scandals and, most recently, the 
     war in Iraq. These will fade; the economy will rebound. 
     Perhaps. Since the war, oil prices have declined and consumer 
     confidence has risen. But the standard diagnosis minimizes 
     deeper weaknesses.
       First, the boom's aftermath. It wasn't just stocks. As 
     consumers celebrated new stock wealth, they borrowed heavily 
     and went on a spending spree. The personal savings rate 
     dropped sharply. Now the market's decline suggests sluggish 
     spending as households rebuild savings. Similarly, businesses 
     went on an investment binge in the 1990s. They overinvested 
     in computers, fiber optics, office buildings and machinery. 
     There's huge surplus capacity. Consumer spending and business 
     investment represent about 80 percent of the economy; if 
     they're weak, growth can't be strong.
       Second, Europe and Japan. Their stagnation deepens global 
     stagnation. Germany, Europe's largest economy, is a mess. Its 
     banks are weak; unemployment is almost 9 percent. Together, 
     Europe and Japan account for about 30 percent of the global 
     economy and a similar share of U.S. exports. If vibrant, they 
     would cushion the U.S. slowdown. They would import more from 
     the United States and elsewhere.
       Third, twisted trade. Global trade is usually a force for 
     good. Countries specialize and spend abroad (via imports) 
     what they earn abroad (via exports). Unfortunately, most 
     Asian countries--led by Japan--strive for permanent trade 
     surpluses. This depresses the global economy by breaking the 
     chain of spending. In 2002 Asia had a current account surplus 
     of roughly $230 billion, reports the International Monetary 
     Fund. Much of this was with the United States. Jobs and 
     production flow from here to there. China looms increasingly 
     large in this process.
       These fierce demons are devouring economic growth--and 
     efforts to revive it. Recall: Since early 2001 the Federal 
     Reserve has cut overnight interest rates from 6.5 percent to 
     1.25 percent. Meanwhile, the Bush tax cuts and weak economy 
     have shifted the federal budget toward ``stimulus.'' A 
     surplus of $236 billion in 2000 became a $157 billion deficit 
     in 2002 (and is headed higher). Tax cuts enhanced purchasing 
     power. Low interest rates enabled millions of homeowners to 
     refinance mortgages. Auto companies provided cheap credit for 
     buyers. Still, the economy sputters. In the past six months, 
     consumer spending has grown at less than half the rate of the 
     previous year. The housing boom may have stalled.
       Stubborn stagnation has led some economists--notably 
     Stephen Roach of Morgan Stanley--to fear deflation, which is 
     a general decline in prices. A few years ago, this seemed 
     preposterous. No more. Global demand remains weak; surplus 
     capacity discourages new investment; gluts depress prices. 
     Deflation could be dangerous: Lower prices could squeeze 
     profits and depress stocks; and lower prices could prevent 
     corporate debtors from repaying loans, leading to defaults 
     and bank failures.
       Whenever the economy unexpectedly weakens, we're told it's 
     a ``pause.'' Maybe. But the present bust may be as 
     misunderstood as was the previous boom. It is worldwide, not 
     just American. It defies textbook economic models and 
     therefore may defy textbook remedies. In Japan, low interest 
     rates and big budget deficits haven't restored growth. 
     European and Japanese weaknesses fundamentally reflect social 
     and political preferences. The desire for social protections 
     has stifled economic growth with regulations and taxes. As 
     for America, recovery requires patience. Surplus capacity 
     must be shut or absorbed; debt levels must be cut.
       What can be done? Good question. Unfamiliar problems may 
     require unfamiliar responses. If things get dramatically 
     worse, that may concentrate people's attention. But for now, 
     Republicans and Democrats are using the petty debate over the 
     proposed dividend tax exclusion to avoid harder questions. In 
     Japan, those questions rarely got raised, because the 
     economy's slow-motion unraveling never presented a clear 
     crisis. The danger of the ``new stagnation'' is that, by 
     creating a false sense that a strong recovery is always 
     imminent, it could cause the same thing to happen here.

  Mr. HOLLINGS. We all know it is not going to stimulate anything in 
that we already have a $428 billion budget deficit this year that is 
stimulus, plus $600 billion next year. We have over $1 trillion in 
stimulation. That is why Alan Greenspan says we do not need any further 
stimulation, and adding $30 billion or $40 billion more is not going to 
do it. But let's assume that it does. It is not going to stimulate 
Peoria. It is going to stimulate Shanghai.
  What has happened is, and Mr. Samuelson talks about this, is that we 
have made it too expensive to do business with our high standard of 
living. Before one can open, for example, Jones Manufacturing in the 
United States, you have to meet requirements for clean air, clean 
water, Social Security, Medicare, Medicaid, plant closing, parental 
leave, safe working place, safe machinery, just go right on down the 
list.
  You can go down to Mexico for $1 an hour, $2 an hour, or you can go 
to China for 50 cents an hour. So they are going like gang busters 
there. We have a tremendous imbalance of trade--a $500 billion 
imbalance. We are going out of business. We have to get with reality. 
We cannot treat foreign trade as foreign aid any longer. We have to get 
a competitive trade policy. We have to cut out the tax benefits 
companies have when they go overseas, and instead include tax benefits 
for manufacturing in this country.
  We have to straighten out many other items dealing with trade. There 
is no question that we have to say to the Export-Import Bank and the 
Overseas Private Investment Corporation that they shall not finance any 
product that does not have at least 80 percent U.S. content; that we 
ought to prohibit the sale in interstate commerce of any manufactured 
product by an individual 12 years of age or younger. We have to require 
the Buy America provision not just in defense but in homeland security. 
We have to get what Senator Dole tried to do 10 years ago with the 
World Trade Organization judicial body to review the WTO 
determinations. There are a lot of things we have proposed.
  I ask unanimous consent that this article of mine from the State 
newspaper in Columbia last week be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                     [From the State, May 3, 2003]

                 Washington's Wild Ways Choke Recovery

                        (By Ernest F. Hollings)

       President Bush storms the country, lamenting that ``people 
     are looking for jobs and can't find them.'' Two big reasons: 
     First, industry is not about to invest or re-hire with 
     Washington spending like drunken sailors. Second, any 
     expansion of jobs will probably be in China, Mexico or India.

[[Page S5797]]

       Business people look at how government does business. For 
     30 years, from 1945 to 1975, the sum total of government 
     deficits, including the costs of World War II, Korea and 
     Vietnam, amounted to $358 billion. Last year's fiscal 
     deficit--without the cost of Iraq--amounted to $428 billion.
       Instead of levying taxes to pay for Iraq, the president 
     says: ``In time of war, a country runs deficits.'' False. The 
     United States raised taxes to pay for every war since the 
     Revolution--until now. President Lincoln put a tax on estates 
     and dividends to pay for the Civil War. This president says 
     to eliminate the tax on estates and dividends; the economy 
     needs stimulating.
       We just had a $428 billion deficit, or stimulus, last year; 
     and this year's deficit (stimulus?) will exceed $500 billion. 
     A tax cut of $50 billion more is not going to stimulate. 
     What's more, the business executive sees on Page 4 of the 
     Republican Conference budget just passed that the national 
     debt in the next 10 years goes from $6 trillion to $12 
     trillion.
       Interest costs are headed through the roof. Economists at 
     the Federal Reserve have just estimated that each $100 
     billion of deficit raises interest costs a quarter of one 
     percentage point. The Brookings Institute says interest costs 
     rise between one-half and one percentage point for every $100 
     billion of deficits.
       Interest rates will soar, and this is no time to invest or 
     re-hire. We have just lost 2.6 million jobs with the 2001 tax 
     cut stimulus, and there is no education in the second kick of 
     a mule.
       Let's assume the Bush tax cut stimulates. Jobs created will 
     not be in Columbia, but in Shanghai. Corporate America's is 
     moving fast to cut labor and environmental costs. Before 
     opening Jones Manufacturing, U.S. law requires clean air, 
     clean water, Social Security, Medicare, Medicaid, minimum 
     wage, a safe workplace, safe machinery, plant closing 
     notice, parental leave, etc. A plant can locate in Mexico 
     for $2 an hour labor and none of these requirements--or to 
     China for less than 50 cents an hour.
       Corporate America has banded together a conspiracy for 
     ``free trade'' to facilitate imports and export jobs faster 
     than we can create them. Led by the U.S. Chamber of Commerce, 
     the conspiracy includes the Business Roundtable, National 
     Association of Manufacturers, Conference Board, think tanks, 
     funded universities, the retailers making bigger profits on 
     the imported articles and newspapers making most of their 
     profits from retail advertising, all for ``free trade.''
       As a result, we have lost most of our hard manufacturing. 
     And now we have a $5 billion deficit in the balance of trade 
     in semiconductors and the worst trade deficit in farm 
     products in 16 years, including such products as cotton, with 
     China.
       Free trade is an oxymoron. We must stop treating trade as 
     aid and compete in the global economy. We must first 
     eliminate the tax benefits for offshore production. Second, 
     prevent the Export Import Bank or Overseas Private Investment 
     Corporation from financing any product that does not contain 
     at least 80 percent U.S. content. Third, prohibit the sale in 
     interstate commerce of any manufactured product by anyone 
     under 12 years of age. Fourth, require the Buy America 
     provisions for both the Defense Department and Homeland 
     Security. Fifth, eliminate the International Trade 
     Commission, which never finds ``injury'' from a dumping 
     violation. Sixth, return anti-dumping money to injured 
     parties. Seventh, reform the World Trade Organization dispute 
     settlements by establishing a panel of federal judges to 
     review WTO determinations.
       In 1993 with a similar fiscal deficit and gross domestic 
     product, we cut spending and raised taxes, putting the 
     government on a pay-as-you-go basis. This resulted in the 
     strongest economy in the history of the United States. Eight 
     million jobs were created. Today, we must put government 
     again on a pay-as-you-go basis, reform trade and create jobs.
       In addition to rebuilding Bosnia, Afghanistan and Iraq, now 
     is the time to rebuild America.

  Mr. HOLLINGS. Now is the time to sober up and approach it the way we 
did in 1993. When Governor Clinton was first elected, he invited the 
best of the best in financial minds to Little Rock. Greenspan went. The 
Governor was advised: you are going to not only have to cut spending 
when you take office, you are going to have to raise taxes. And we did.
  The chairman of the Finance Committee, Bob Packwood, said: I will 
give you my home if this works. Newt Gingrich said: This is going to 
put us into a depression.
  John Kasich, the chairman of the House Budget Committee, said: I will 
change parties and become a Democrat if this thing works. Oh, it was 
going to be disastrous.
  The disaster turned out to be 8 years of the strongest economy. We 
paid the bills, putting Government on a pay-as-you-go basis. We created 
22 million jobs. Now with President Bush's voodoo 2 that we passed in 
2001, we are just more in debt. And the Democratic proposal just 
announced is nothing but Bush lite. You can either have the Bush 
proposed program of $756 billion in tax cuts, or $550 billion in tax 
cuts from the House, or Bush lite of $150 billion. None of them are 
going to stimulate anything.
  Since the President has taken office, the country has lost 2.6 
million jobs already. Don't you think we ought to stop now and get a 
hold of ourselves and realize what we have with all of these deficits; 
that interest rates are bound to go up, as well as the cost of a car, 
home payments, the cost of a washing machine, the cost of a 
refrigerator, and everything else? America is seeing this because back 
home every mayor is having to cut back, every Governor is having to cut 
back. They are having to release prisoners from the penitentiary. They 
are having to charge children to ride on the schoolbus. They are doing 
any and everything to try to get fiscal discipline back into their 
particular budgets.
  But up here, we're like drunken sailors, saying oh, no, do not worry 
about it. We have to get reelected next year. To dickens with the needs 
of the country. It is the needs of the campaign, and we have to have 
tax cuts. So there we go. We have a big argument around here whether it 
should be $750 billion or $550 billion or $150 billion in tax cuts. And 
the best of minds say: Wait a minute, we are in trouble.
  As Mr. Samuelson says, we have financial stagnation. We have the 
threat right this minute of deflation, and we are not creating jobs at 
all. We have a deficit in the balance of trade in not only hard 
manufacturing, but in high tech, high tech the motor of growth.
  Again, with respect to the service economy, the Wall Street Journal 
this last week, said:

       U.S. financial-services companies plan to transfer 500,000, 
     or 8 percent, of total industry employment to foreign 
     countries.

  I ask unanimous consent that this article from the Wall Street 
Journal be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

              [From the Wall Street Journal, May 1, 2003]

              The Economy: More Financial Jobs Go Offshore

                         (By Michael Schroeder)

       In an accelerating trend, U.S. financial-services companies 
     plan to transfer 500,000 jobs, or 8% of total industry 
     employment, to foreign countries during the next five years, 
     according to a new study.
       Offshore job transfers have primarily focused on back-
     office functions such as data entry, transaction processing 
     and call centers. But the job shift now is involving a wider 
     range of professional lines of work, including financial 
     analysis, regulatory reporting, accounting and graphic 
     design, according to A.T. Kearney, a management-consulting 
     subsidiary of Electronic Data Systems Corp.
       The main reason remains the same: cost cutting. The study 
     estimates an annual cost savings of $30 billion for the 
     financial-services industry. A call-center employee earns 
     about $20,000 in the U.S. and about $2,500 in India. A Wall 
     Street researcher with a college business degree and a few 
     years experience can earn as much as $250,000, compared with 
     $20,000 in India.
       The study was based on interviews in February and March 
     with senior executives from 100 of the largest U.S. banks, 
     brokerage firms, insurance companies and mutual funds. 
     Corporate chiefs list India as the most attractive country 
     overall for offshore business processing, followed by China, 
     the Philippines, Canada, the Czech Republic, Mexico, 
     Australia, Brazil, Ireland, Hungary and Russia.
       China particularly should see significant growth, despite 
     U.S. companies' experience with the Chinese violating 
     intellectual-property laws. A.T. Kearney Managing Director 
     Andrea Bierce said that problem is being addressed by a major 
     U.S. insurer that is developing a new policy protecting 
     intellectual property.
       Among the most aggressive U.S. companies are General 
     Electric Co.'s GE Capital Corp. unit, Citigroup Inc. and 
     American Express Co. GE Capital has nearly 15,000 employees 
     in India alone and plans to add 5,000 by year end, said 
     Stefan Spohr, one of the study's authors. A.T. Kearney itself 
     moved 50 jobs in creative-presentation service to India.

  Mr. HOLLINGS. We are going out of business, and the discussion here 
is between $350 billion and $550 billion in tax cuts, and all they want 
to know is who can do the most? I can go home next year and run for 
reelection and say: Look what I have done. I have given you a tax cut--
when we do not have any taxes to cut. We are running a $600 billion 
deficit in the Republican budget, when the Republicans are supposed to 
be financially responsible.
  We never heard of $600 billion deficits. You folks came to town and 
said, Look, we not only want a $600 billion

[[Page S5798]]

deficit, we want it each year, every year, for the next 10 years. It is 
the budget on page 4. People don't see that.
  I can see the Presiding Officer is going to call my time. He has been 
very courteous. I will be glad to yield him time when he can take the 
floor and answer these things because I have not been able to find a 
good answer.
  I am trying to sober them up. Let's put the Government on a pay-as-
you-go basis. Let's start getting competitive in industry and 
manufacturing and create real jobs. Let's start rebuilding--not Bosnia, 
not Afghanistan, not Iraq--but rebuilding the United States of America. 
That is the need of the hour.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. CRAIG. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CRAIG. Mr. President, are we in morning business at this time?
  The PRESIDING OFFICER. Yes, that is correct, until 12 noon.
  Mr. CRAIG. I thank the Chair.

                          ____________________